VIX Futures Readying For Volatility

Just about 2 weeks ago sentiment was hitting extreme s that I believe were unseen since 2000. The Fear and Greed Index which runs from 0-100 with zero being the most fearful or bearish, pegged that reading for I believe 4 consecutive days which is why it was such an extreme. In anchoring expectation posts, I had warned and even said "Book mark this post", this is going to be a monster rally, but nothing in the market has changed, the rally is about changing sentiment because everyone can't be short and make money in a zero sum game where someone has to lose for someone to win.

This morning my sentiment watcher over the last several years confirmed bulls are out in force, wildly bullish, giddy to the point of silliness which is what the market was aiming for, what we wanted to see, the reason I posted what to expect so you could use it to your advantage when we got there.

In any case, looking at volatility in VIX futures yesterday and previous days, I have seen the positive divegrence grow from the 15 min chart to the stronger 30 min chart to the 60 min chart which was positive, but not screaming, this morning, the 60 min VIX futures 3C chart is SCREAMING! These are the signals I don't ignore ever.

 You can see the negative divegrence in to the highs, that obviously correlates with the market lows as VIX moves opposite the market. However, the current 3C 60 min divergence went from simply positive yesterday to a screaming leading positive.

On this timeframe and with this type of divergence , this is not the size of bulls hedging longs in to the F_O_M_C, this is someone expecting something very ugly on the downside.

When we have strong strategic longer term divergences, we come back to the faster charts looking for the timing or tactical side to execute our strategic goals. Yesterday the 5 min chart started screaming as well in this leading positive divegrence; I DIDN'T KNOW IF THIS WAS PRE-F_O_M_C HEDGING OR A TIMING SIGNAL, now that the F_O_M_C has passed, you might expect hedgers to have let go of some of this position, I don't think this is a sign of hedgers, I think it's more likely a timing signal especially after the move in a 60 min chart, it takes a lot of underlying money flow to do that to a chart that long that fast.

In any case, remember what I said about dull markets, they produce some nasty surprises and whether we sit above the 50,100,200-day moving averages or not, it sounds like retail sentiment is screaming bullish, which means this move is MISSION ACCOMPLISHED.

I have no plans on moving any of my shorts, I may add somewhere if I see a nice opportunity.